Will the Autumn Statement’s short-term focus sideline longer-term outcomes for public services?

Public services may well have passed their tipping point, and short-term firefighting is clearly not the way back
Photo: Tayfun Salci/ZUMA Press Wire

Jeremy Hunt’s Autumn Statement is the culmination of one of the most chaotic few months in British political history. The Office for Budget Responsibility forecast is grim and captures the turbulence of five major fiscal statements since March. The markets may for now be placated, but for departments, fiscal uncertainty has not gone away. Notwithstanding welcome increases in spending on health and education – £3.3bn and £2.3bn respectively in 2023-24 and 2024-25 – inflation has all but eroded departmental budgets set at the 2021 Spending Review. Departments have been told to find efficiencies to account for what are in effect real-terms cuts. The deferred £30bn-a-year cuts to public services and capital investment produces a sword of Damocles and inevitably fuels short termism. And this must be set in the context of a well-documented decline in the standard of core public services, a welfare state buckling under the load of increased need and an estimated 7% fall in living standards over the next two years.  

A “help today, squeeze tomorrow” approach to the public finances makes it much harder for departments to smooth out the bumps in the road. The government recognises that it must get better at thinking in the round about the dynamic consequences of spending decisions if it is to realise its commitment to public value. However, while the Autumn Statement makes sense politically, the Institute for Fiscal Studies has questioned its short term feasibility given pressure on public sector wages. The risks are amplified massively after 2024-25. A plausible fiscal strategy that gets to grips with public sector resilience may well mean higher taxes but nevertheless be more "credible" long term. It need not spook the markets if the case for strategic investment in public services is made. Tight settlements for unprotected departments – many of whom, like the Ministry of Justice, have seen the biggest decline in performance – are meaningless, if the Treasury is simply forced to top-up their funding in haphazard ways when reality bites.  

Uncertainty cascades down through the delivery chain. On the ground, public service providers often struggle to recruit for low-wage roles. In some policy areas, the duration of employment contracts is linked to short-term funding. The pressure on frontline workers is often considerable. The resulting churn can be a false economy when training costs are wasted and expertise in complex policy areas does not embed into everyday practice. The effectiveness of public money is undermined.  

At the local authority level, long-term outcomes have suffered as commissioners struggle to manage numerous poorly integrated, centrally prescribed pots of money with short timeframes. This is a carryover from the austerity years that brought piecemeal funding and the perception of a “race-to-the-bottom” mentality. But the granular detail is largely absent from the wider public debate.  

Empowering local authorities to raise council tax, a revenue stream with notoriously uneven yields, eases the harshest effects of inflation on local services but is likely to favour the least deprived areas. Many long-term pressures, including adult social care, remain unaddressed. The short-term focus leaves vital but non-statutory neighbourhood services at risk, including critical preventive interventions, many of which are well-evaluated in value for money terms.  

In this incredibly challenging context, it is vital that departments and public bodies do not lose sight of longer-term, often cross-cutting outcomes. The recent rough sleeping strategy is an excellent example of a multi-departmental commitment to an overarching goal. Outcome Delivery Plans are intended to enhance inter-departmental cooperation as an aspect of departmental business planning. Yet existing ODPs and priority outcomes are limited to 20 cross-cutting priorities, or just 26% of the total number. The experience of Public Service Agreements suggests that when one department “owns” the shared outcome in a tight funding environment, traditional silos kick in. Institute for Government analysis confirms this has not yet been overcome. Part of the problem is existing funding arrangements – only around 0.3% of total public spending is allocated on the basis of joint ownership of shared priorities.  

These challenges are well known across the civil service. The £200m Shared Outcomes Fund points to potential routes forward by bringing departments and agencies across the public sector together in innovative ways. It will require careful evaluation to make the case for scaling up. This is incredibly complex because discouraging siloed working is a systemic challenge that transcends central government. It requires sustained investment. The Evaluation Task Force is a relatively new but welcome initiative to assist departments and other public bodies in honing their understanding of “what works”. As more departments develop detailed evaluation strategies, there is real scope to harness an understanding of value for money that extends way beyond financial inputs. 

The government’s decision to suspend ODPs for 2022-23 is a symptom of the impossibility of departmental planning in a context of organisational and fiscal turbulence. Yet in today’s tough fiscal climate, public servants must have a laser-like focus on long-term value for money and the outcomes that affect people’s lives. Public services may well have passed their tipping point, and short-term firefighting is clearly not the way back.  

The Sunak government has placed public services among its core priority areas, alongside stability and economic growth. But talking about financial inputs is easy. It is more difficult for a minister to articulate clearly how these translate (or not) into long-term outcomes, especially when they’re cross-cutting. This, in truth, requires political leadership to make the cogent case for public sector investment on both economic and social grounds.  

Without entrenching the principles of ODPs into long-term departmental business planning, an understanding of the effectiveness of critical public services will not enjoy its proper place in any equation of value for money.  

Dave Richards is Diamond professor of public policy at the University of Manchester. Sam Warner is a research associate at the University of Manchester. Martin Smith is Anniversary professor of politics at the University of York. 

The above piece draws on research for the Public Expenditure Planning and Control in Complex Times project, funded by The Nuffield Foundation. 

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